Glanbia chairman Henry Corbally and Group Managing Director Siobh�n Talbot have confirmed that Glanbia Co-op shareholders will vote in Punchestown on Thursday 18 May on series of proposals, including the formation of a new Glanbia

Published:14:04Wednesday 26 April 2017

Glanbia Co-operative Society (Glanbia Co-op) has has announced that it has signed a binding legal agreement with Glanbia plc to establish a new joint venture to be known as Glanbia Ireland.

As announced on February 22, Glanbia Co-op proposes to pay €112 million to acquire a 60% shareholding in the plc’s Dairy Ireland division, which consists of Glanbia Consumer Products and Glanbia Agribusiness.

Glanbia Ireland will combine Glanbia Ingredients Ireland, Glanbia Consumer Products and Glanbia Agribusiness, as a joint venture 60% owned by the Co-op and 40% owned by the plc. This builds on the successful Glanbia Ingredients Ireland (GII) joint venture established in 2012.

Glanbia Co-op has also confirmed proposals to distribute by way of “Spin-out” c.5.9 million shares in Glanbia plc to all members of the Co-op and to create a €40 million Member Support Fund. The value of the share “Spin-out” is an estimated €100 million based on the Glanbia plc closing share price of €17.13 on Friday 17th February 2017. This would be worth approximately €6,637* for a member with the average shareholding. For active dairy farmer members, the average value of the spin-out would be €10,791*.

Subject to Member approval, the Board of Glanbia Co-op proposes to allocate up to €40 million of its resources to a Member Support Fund. This will be 50% funded through the sale of Glanbia plc shares with the balance from Co-op resources.

Payments from the Fund will be in the proportion of 75% patronage to active members and 25% Special Dividend to all Members, with the nature and timing of any payments at the discretion of the Glanbia Co-op Board.

If the proposed transaction is approved by Members, Glanbia Co-op will fund the acquisition of 60% of Dairy Ireland and part fund the €40m Member Support Fund through the sale of c.8.9 million Glanbia plc shares (equal to 3% of the issued share capital of the plc).

The Co-op holds 36.5% of the issued shares in Glanbia plc. If all of the proposals above are approved the Co-op would own 31.5% of the issued share capital in Glanbia plc.

These proposals by the Board of the Co-op are subject to Member approval and will be voted on by eligible Members at a Special General Meeting (SGM) of the Co-op which will take place at Punchestown Event Centre on Thursday, May 18.

All of these proposals have the unanimous support of the Board and Council of Glanbia Co-operative Society, who recommend them to Members for approval.

Chairman of Glanbia Co-op Henry Corbally said: “The proposed creation of Glanbia Ireland is an exciting development for Glanbia farmers. It brings the strong portfolio of Glanbia’s Irish dairy and agribusiness assets into majority Co-op ownership while building on the strong partnership with Glanbia plc. I would encourage all Members to familiarize themselves with these proposals and to attend our SGM in Punchestown Event Centre on 18 May.”

Siobhán Talbot, Group Managing Director of Glanbia said: “Having established GII and successfully managed the transition to a post milk quota environment there is a compelling rationale to combine the Irish businesses and supply chain to create efficiencies and scale. As a top 10 dairy company in Europe, exporting to over 60 countries, Glanbia Ireland would have the scale to invest in innovation and growth on a standalone basis.

“GII suppliers plan to supply 30% more milk in 2020 than in 2016. The financial strength of the Glanbia Ireland business will allow it to fund a €250 - €300 million investment programme to 2020 without a requirement for supplier contributions.”

Approvals and conditionality

The Co-op Board will seek the approval of eligible members present at the SGM by a simple majority for the proposal to create Glanbia Ireland. If the necessary approvals for the creation of Glanbia Ireland are secured, the transaction is expected to be completed by mid-year.

If this initial proposal is approved by Members, Glanbia Co-op will also hold a separate vote on related proposals which will require not less than a two thirds majority vote of eligible Co-op members present, including two-thirds of members classified as active milk suppliers. Those proposals are;

l The sale of up to 3% of the issued share capital in Glanbia plc to finance the proposed transaction and part finance a proposed Member Support Fund;

l The spin-out of 2% of the issued shares of Glanbia plc currently held by Glanbia Co-op directly to its members on a pro rata basis based upon their individual holdings in the Co-op.;

l A rule change allowing the Board of Glanbia Co-op the discretion to further reduce the Co-op’s shareholding in Glanbia plc to 28%, as well as requiring further member approval for any future proposal to reduce the Co-op’s shareholding in Glanbia plc below 28%.

The proposal to create the Member Support Fund, which is linked to all of the above proposals, will require the approval of eligible members present by a simple majority.

It is further proposed that all future dividends paid by Glanbia Ireland to the Society will be set-aside for distribution to active Members, which will require the approval of eligible Members by a simple majority.

The Proposed Transaction will also be subject to approval by Glanbia plc’s shareholders via an extraordinary general meeting (EGM) on May 22.